.. d assembly from all of the provinces gathered in Guatemala and declared its independence from Spain under the name United Provinces of Central America. In 1824 it adopted the Constitution of the Federal Republic of Central America, a document similar to the Spanish Constitution of 1812, providing for a federation of Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica. Chiapas decided to stay with Mexico, and Panama had become part of the Republic of Columbia in 1821. In 1824 the constitution provided a single-house legislature and reserved considerable autonomy to the states, yet it offered an adequate framework for a union. Different provincial ideologies began to show themselves at this time, and the first presidential election led to disaster.
A Liberal, Manual Jose Arce, won the election although it appeared that his opponent had more popular votes. This electoral process angered not only conservatives who were displeased with the electoral process, but also extreme liberals who feel that their candidate had sold out to conservatives to gain votes after electing a conservative to replace a liberal Guatemalan state governor. The Salvadoran state government rebelled, touching off a civil war from 1826 to 1829. The Liberals won the bloody struggle in 1829, under the command of Francisco Morazan . Under his presidency he exiled Conservatives, including the archbishop and other clergy, and instituted economic, social, educational, and judicial reforms. Morazan presidency is also contained a lot of internal conflict.
In 1833 Morazan was forced to quell Native American interests that resurfaced in a rebellion in El Salvador. In 1837 peasants revolted in Guatemala due to the Liberal policies of the governor and the panic due to a cholera epidemic. They not only expelled the governor, but also divided up the liberals so that the conservatives had a chance to take control. An attempt, under liberal leadership, was successful in attempting to form a 6th state from parts of Western Guatemala, but it was quickly retaken. The federation was in disarray at this point, and by 1938 Nicaragua, Honduras, and Costa Rica all withdrew from the union .
In 1847 Guatemala declared itself a sovereign republic, and Costa Rica soon followed in 1848. In 1855 in Nicaragua, William Walker made himself president with the aid of the alliance of Nicaraguan Liberals, only to find a united army from all five states ready to defeat. By 1872 the Liberals had returned to power in every state except Nicaragua, and they continued to dominate politics through the middle of the 20th century. They placed strong importance on agricultural exports as the key to national modernization. A transportation and communication infrastructure was also developed by the Liberals, which aided them in bringing Central America into the North Atlantic Trade economy. In 1903 the United States began its construction on the Panama Canal, which would greatly impact the economy of this tiny nation in the years to come.
This time period from about 1870 up until the 1940’s was characterized by military dictatorships, who aided the farmers by protecting there interests. By the middle of the 20th century, the powerful political and economic elites associated with the export-led economies promoted by the Liberal parties faced strong representation from the middle- and working-class people. The Communist nation is believed to have had a significant influence on the working people of Central America. What happened from this point in time differs from country to country. In Guatemala, armed conflict started in 1963 and lasted for 33 years.
Its origins are traced back to the overthrow of democratically elected president Jacobo Arbenz in 1954. El Salvador suffered a civil war that began in 1979 and ended in 1992 with a peace agreement. Nicaragua experienced civil war from 1974 to 1979, which ended in the overthrow of self-imposed dictator Anastasio Somoza Debayle. Costa Rica and Honduras were successful in establishing a democratic state, though due to the difficulties in the other countries foreign trade was greatly impacted in these countries . In 1987 a Central American Peace Plan was established that was instigated by President Oscar Arias Sanchez of Costa Rica. It would later include unification plans, similar to that of the European Union.
In the 1980’s the countries in Central America experienced an economic slump, where they saw large external imbalances, high inflation, output stagnation, and a deterioration of social conditions. Contributing factors were the armed outbursts in El Salvador, Guatemala, and Nicaragua (which had adverse effects on the economies of Costa Rica and Honduras). Structural policies and Latin American debt crisis worsened this regions foreign trade. In the early 1990’s, however, most of the countries implemented macroeconomic and structural reforms, which were often supported by financial and technical assistance from IMF, the World Bank, and the Inter-American Development Bank. In the mid 90’s privatization, financial sector reform, and trade liberalization become areas of focus.
As a result economic performance improved considerably: growth increased: inflation declined: external position strengthened: poverty decreased: the average GDP growth rose to almost 4 percent: and per capita output increased to an average of 1.2 percent. Costa Rica, El Salvador, and Guatemala grew at twice the rate of Honduras and Nicaragua because they had more advanced economies. Nicaragua began to recover in 1994, after suffering a period of hyperinflation by implementing reforms that transformed its regulated economy into a market-based economy. Excluding Nicaragua, the countries of Central America have reduced the rate of inflation from 27 percent to 6 percent. In spite of these economic turnarounds 20 percent of the advanced economic countries and as much as 50 percent of the less developed countries still live below the poverty line. The countries of Central America have clearly begun to turn their economies around.
El Salvador has pegged its currency to the U.S. dollar since 1993, while all the other countries have exchange systems that allow for some degree of exchange flexibility. The education and health sectors in all of these countries have seen a dramatic turnaround partly due to the increased availability in external funds for social problems provided by postwar reconstruction in El Salvador, Guatemala, and Nicaragua. While Costa Rica continued to place these two items high on their social services lists . A major set back hit most of Central America in the fall of 1998. For four days Hurricane Mitch devastated Nicaragua, El Salvador, Honduras, and Guatemala with four feet of rain .
It created waves 40 to 50 feet high off of the coast of Honduras. This caused massive mudslides, swept away bridges, roads, and villages. This storm left over 10,000 people dead and millions left homeless. This disaster is going to hit these countries hard economically too. In Nicaragua, an estimated 67 percent of the Gross Domestic Product was lost do to crop damage from the storm .
After this hurricane most of the nations of Central America were at a standstill. Hundreds of millions of dollars, however, have begun to poor out of other nations pockets to aid the hurt countries. Millions more are also coming from private organizations, mostly religiously affiliated. This could prove to be a good turnaround for the people of these countries, because there will be jobs needed to be filled in construction, and many people there to fill them. These pictures show the size of Hurricane Mitch. This picture has been altered to show the size of the storm-compared toe the size of each country. Looking ahead, these nation face difficult challenges in recovering from the recent disaster hurricane Mitch, strengthening their social policies, improving external competitiveness, and reducing poverty levels. More needs to be done in Nicaragua and Honduras to ease them off of the foreign aid they are currently receiving. In El Salvador and Guatemala’s tax efforts remain insufficient to meet countries’ social investments.
Financial freedoms among businesses have advanced rapidly over the past decade, whereas the laws to keep the businesses in check have not. It is important for the countries of Central America to keep track of all the businesses and their activities. Large amounts of foreign debt are also a serious problem for many of these countries. Taxes in these nations should be simplified and exemptions should be decreased in order to be able to pay for these debts. The countries must also begin to attract investments from corporations in other nations.
The people in these countries do not need a high salary to survive, and companies like Intel, who has set up a factory in Central America, are taking advantage of this. If countries like Nicaragua and Honduras can attract foreign investments of these kinds it will ease the tension from the damaged crops sector. Central America has a promising future. Debt relief is in sight under the Initiative for Highly Indebted Poor Countries (HIPC Initiative), which will help them achieve a sustainable external position and significantly increase their capacity to meet their social needs. With the foreign debt aid and the money that is being invested in the countries for disaster relief, the countries should be able to lower their poverty rates, and increase employment levels. Geography.